Steve Romick’s long career has been defined by discipline, patience, and a deep respect for risk. In his interview on The Compound, he reminded listeners that “the one thing you shouldn’t be surprised by is surprises. Nothing’s ever certain.”
That philosophy has shaped the Crescent Fund since inception, balancing risk protection with an unrelenting search for upside. As Romick explained, “risk first has been paramount for what we do. But the longevity isn’t just tied to that… we’re very mindful of the upside too and making sure that we are always seeking the opportunity.”
That balance has often meant resisting market manias. During the late 1990s, Romick faced immense pressure to join the internet bubble. Yet, he stood apart, insisting that “price matters.”
He avoided the speculative names of the era, buying instead mundane but fundamentally strong businesses where insiders were buying shares. Looking back, he said, “returns are driven not just by what you own, but what you don’t own. So you’re able to avoid some of these big disasters.”
Romick’s approach emphasizes valuation discipline, not simply buying what’s cheap, but understanding the durability of a business.
“Buying a company at 20 times earnings, hoping for growth in earnings and a future P/E of 22, is not a recipe for good risk-adjusted returns,” he said, highlighting the importance of both price and quality.
While he missed Amazon during the financial crisis, he learned from that oversight. “One of the biggest mistakes we made was not buying Amazon earlier on… I’m so concerned about the here and now and less willing to pay for what was obvious about the future.”
He has also been unafraid to walk away from errors quickly. “We bought back PetSmart for a minute… and then we ended up selling it quickly because we realized we were wrong. You have to have the intellectual integrity to question yourself.”
That humility, he noted, is critical for survival: “defiance doesn’t get you anywhere.”
Even today, with markets running hot, Romick remains cautious. “As the markets are rising… we are going to be less exposed as the market rises and get more exposed as it declines.”
He acknowledged that valuations in certain areas are stretched but pointed out that opportunities still exist in smaller companies, cyclical names, and underappreciated industries. “If you have the right management team allocating capital well, good things happen to cheap stocks.”
For Romick, investing is about preparation, patience, and process. “We don’t rest on our laurels. We’re always looking forward. What keeps me getting up every day is knowing that I need to keep doing that.” After three decades at the helm, the lesson is clear: success comes not from chasing fads, but from marrying downside protection with thoughtful pursuit of opportunity.
You can watch the entire interview here:
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